China may ban rare earth tech exports on security concerns

China may ban the rare earth tech exports to countries or companies it deems as a threat on state security concerns, according to a person familiar with the matter.

China may ban rare earth tech exports on security concerns

The Chinese government is currently conducting a review of its rare earth tech exports policy. Officials view the technology needed to refine and purify the raw materials as a more powerful weapon in protecting state interests than the actual minerals, and is looking at banning sales of the technology to some countries or companies, according to the person, who asked not to be identified because the information isn’t public.

While China has no plans to restrict shipments of rare earths to the US, it is keeping the plan in its back pocket should a trade war break out again, the person said.

The Asian nation is also exploring a ban on rare earths as part of its sanctions on some individual companies, including Lockheed Martin Corp, which violated China’s core interest over arms sale to Taiwan, the person said.

China’s Ministry of Commerce didn’t immediately respond to a fax seeking comment.

Shares of MP Materials Corp., the lone US rare-earths producer, closed 6.4 per cent higher on Friday (Feb 19) after earlier touching a record US$46.84 in New York.

The US Defence Department in November awarded the company US$9.6 million (S$12.73 million) to fund processing and separation of light rare-earths at its Mountain Pass operations, a move that signals the nation’s aim to expand domestic production of the permanent magnets that make rare-earths so coveted.

China controls most of the world’s mined output of rare earths, a broad group of 17 elements that are used in everything from smartphones to fighter jets, and has a stranglehold over processing.

Its dominance would leave overseas industries with few avenues to immediately secure supply if curbs were to be put in place.

The minerals have previously been touted as a possible weapon in the US-China trade war, with Beijing readying a plan in 2019 to restrict shipments to hurt the American economy.

The US imports about 80 per cent of its rare-earth compounds and metals from the Asian nation, according to government data.

Those curbs were never adopted, though it spurred the US and Europe to seek out ways to cut their reliance on a single supplier. While rare earths are relatively abundant, mine-able concentrations are less common than other ores and countries face hurdles including high costs and environmental concerns in setting up domestic industries.

Mr Donald Trump last year signed an executive order aimed at expanding domestic output of rare-earth minerals, a year after the Department of Defence was ordered to spur the production of magnets. The US has also been awarding contracts and signing investment agreements aimed at establishing its own processing capabilities.

Earlier this week, the Financial Times reported that China is exploring whether it can hurt US defence contractors by limiting supplies of rare-earth minerals that are critical to the industry.

Originally published at The straits times